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Further regulation of banks might be considered, after collusion claims

17 February 2017 - 13:05
Linda Ensor

Yunus Carrim. Picture: FINANCIAL MAIL

Parliament's finance committee might consider whether further regulation of banks is required once the Competition Tribunal has completed its work on the alleged collusion by major banks, finance committee chairperson Yunus Carrim said on Friday.

The committee would "consider the issue in a structured way", Carrim said.

Collusion by banking institutions was also likely to arise in the committee’s public hearings on transformation of the financial services sector on March 14, he said.

Carrim said the Competition Commission’s investigation into bank collusion had reinforced the need for more effective regulation of banks.

The investigation also highlighted the concerns about SA’s four major banks controlling about 90% of the market, along with the need to create space for new entrants, not least Postbank.

The committee welcomed the Competition Commission's long overdue investigation into possible bank collusion and its decision to refer the matter to the Competition Tribunal for prosecution.

"Obviously, the banks have to be given a fair chance to respond to the allegations and the Tribunal the space to make an independent decision on the matter," Carrim said.

He added: "But if the banks are found guilty of wrongdoing, we hope the tribunal will take appropriately strong action. After all, it’s the poor and low-income earners who would have suffered disproportionately from any market abuse. We also note the strong action taken elsewhere in the world, not least the US and UK, when similar actions of wrongdoing were proved."

Carrim emphasised the crucial role that banks play in the economy, saying calls for their transformation did not flow from a "reckless populism that will ultimately undermine the interests of the poor and disadvantaged." He added: "We need as far as possible to negotiate this transformation."